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Economic snapshot for November 2009

The Center for American Progress reports that weakness in the labor market is threatening the fledgling economic recovery. Policy should center on creating jobs to boost U.S. middle class economic security and help those who are most vulnerable.

Friday, November 20, 2009

By Christian E. Weller

(The Center for American Progress is a nonpartisan research and educational institute dedicated to promoting a strong, just and free America that ensures opportunity for all.)

Lingering weakness in the labor market is threatening the fledgling economic recovery. Millions of jobs have been lost and unemployment has risen to the highest level in almost three decades. The labor market weakness will make it harder for families to repay their high levels of debt and thus will likely contribute to high foreclosures, credit card defaults, and bankruptcies.

Policy has shown what it can do to revive a depressed financial market and turn the corner for a shrinking economy. Policy attention should now lie squarely on job creation to ensure that the recent improvements are not short lived. Strong labor market gains are necessary to boost the American middle class’ economic security and help those who are economically most vulnerable. Extended unemployment benefits, increased health insurance coverage, and support for state and local government programs will all help achieve those goals.

1. The U.S. economy has turned the corner. Gross domestic product grew at an annual rate of 3.5% in the third quarter of 2009, the first increase since the second quarter of 2008 and the largest gain since the third quarter of 2007. The economic stimulus legislation helped to increase consumer spending, home purchases, and federal government spending in the summer of 2009, which all contributed to faster growth.